Analyzing AON (NYSE:AON) and Lemonade (NYSE:LMND)

Lemonade (NYSE:LMND) and AON (NYSE:AON) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Institutional & Insider Ownership

80.3% of Lemonade shares are held by institutional investors. Comparatively, 86.1% of AON shares are held by institutional investors. 12.2% of Lemonade shares are held by insiders. Comparatively, 1.0% of AON shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Lemonade has a beta of 1.87, suggesting that its stock price is 87% more volatile than the S&P 500. Comparatively, AON has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500.

Earnings and Valuation

This table compares Lemonade and AON”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lemonade	$975.00 million	3.69	-$165.50 million	($1.83)	-25.38
AON	$17.18 billion	3.37	$3.69 billion	$18.14	15.05

AON has higher revenue and earnings than Lemonade. Lemonade is trading at a lower price-to-earnings ratio than AON, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Lemonade and AON’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lemonade	-14.19%	-26.78%	-7.08%
AON	22.27%	42.13%	7.57%

Analyst Recommendations

This is a summary of recent ratings and price targets for Lemonade and AON, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lemonade	1	4	4	0	2.33
AON	1	6	12	0	2.58

Lemonade currently has a consensus target price of $63.50, suggesting a potential upside of 36.70%. AON has a consensus target price of $382.76, suggesting a potential upside of 40.24%. Given AON’s stronger consensus rating and higher probable upside, analysts clearly believe AON is more favorable than Lemonade.

Summary

AON beats Lemonade on 11 of the 14 factors compared between the two stocks.

About Lemonade

Lemonade, Inc. provides various insurance products through various channels in the United States, Europe, and the United Kingdom. Its insurance products include stolen or damaged property, and personal liability that protects its customers if they are responsible for an accident or damage to another person or their property. The company also offers renters, homeowners, car, pet, and life insurance products, as well as landlord insurance policies. In addition, it operates as an agent for other insurance companies. The company was formerly known as Lemonade Group, Inc. and changed its name to Lemonade, Inc. Lemonade, Inc. was incorporated in 2015 and is headquartered in New York, New York.

About AON

Aon Plc engages in the provision of risk, health, and wealth solutions. It focuses on risk capital including claim management, reinsurance, risk analysis, management, retention, and transfer; and human capital involving analytics, health and benefits, investments, pensions and retirement, talent and rewards, and workplace wellbeing. The company was founded in 1982 and is headquartered in Dublin, Ireland.